Microsoft will reportedly announced in a couple weeks a new version of Windows, which runs on ARM CPUs, like Apple's iOS. The OS will be put on new Windows tablets, geared to compete with the best-selling iPad.

Intel can't be happy with this news

While
Windows Phone 7 runs happily on ARM-architecture processors, suffice
it to say that no traditional version
of Windows has ever run on an ARM CPU. But according to
reports, Microsoft Corp. is preparing a full fledged ARM-based
Windows in an attempt to capture tablet market share.

According
to Bloomberg and The
Wall Street Journal,
Microsoft has reached an understanding with ARM Holdings Plc. and
will announce the coming operating system at the 2011 Consumer
Electronics Show, likely during CEO Steve Ballmer's keynote.

The
shift seems a logical one. For mobile applications, ARM is a
particularly good fit. It features much lower power consumption
and similar clock speeds versus the rival x86 architecture.
While Intel has come a long way with its low voltage x86 Atom
platform, it still lags behind ARM's designs in power efficiency.

In
the long run, the announcement of an ARM-based Windows could spell
very bad news for Intel, and to a lesser extent smaller competitor
Advanced Micro Devices.

The irony there is that Intel
used to produce ARM CPUs, but in what now looks like an unwise move,
it divested itself of those holdings. After purchasing the
Digital Equipment Company (DEC), Intel continued to design and
produce the company's ARM-based "StrongARM" processors for
mobile devices. In 2000 it transitioned to a newly named line
of ARM CPUs called XScale.

But in 2006 it sold its
XScale mobile processor unit to Marvell. An XScale processor is
found in the Blackberry
Torch, among other devices. To this day Intel and Marvell
still co-own some XScale processor lines -- but only network
processors, embedded processors and their ilk. Intel firmly
passed away its rights to mobile ARM designs -- a move it likely is
now beginning to regret.

Robert
Breza, a Minneapolis-based analyst for RBC Capital Markets, estimates
that an ARM-powered Windows tablet would be as cheap as the iPad and
could take 10 to 20 percent of an estimated 50 million unit tablet
market last year. But he says the company has to deliver,
commenting, "They've got to come back with a product that’s
better than 'me too' and is equal if not better in features. A
lot of tablets today are inferior to PCs."

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